Property owners in eight communities may have to pay Pontiac schools' $7.8M debt

In the midst of state scrutiny over its financial management, the chances of Pontiac schools paying off $7.8 million in delinquent health insurance payments to avoid a special tax levy in eight northern county communities are getting slimmer.

Summer tax bills must go out mid-June, and Pontiac school officials have so far not been able to get a loan against future taxes through the state Treasury.

According to a Treasury spokesman, the state has been reluctant to make the loan because the district has been unreliable. However, officials are still considering the possibility.

If nothing changes, a one-time tax levy of 3 additional tax mills, or $300 on a house valued at $200,000, will be levied against property in Pontiac and portions of Auburn Hills, Sylvan Lake, Lake Angelus and the townships of Bloomfield, West Bloomfield, Waterford and Orion on July 1.

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The tax levy was ordered in Oakland County Circuit Court to pay off the debt to the Michigan Education Special Services Association, or MESSA, for a year of unpaid health coverage to teachers in the Pontiac Education Association.

Pontiac school officials have asked the state Treasury to process a loan against its future taxes but so far that has not happened.

Making it difficult for Pontiac school officials to win a loan to pay off the debt is the fact that the district is currently under preliminary review by the state Department of Education for poor financial management, a step that could lead to a review team ordered by Gov. Rick Snyder and a possible emergency manager or bankruptcy.

Michigan Treasury Department spokesman Terry Stanton said: "It's not clear, at this point, if the district would qualify for issuing" a tax anticipation loan.

"Treasury will need additional financial information and detail from the district," Stanton said in a written reply to a query about the status of the Pontiac district's request for the loan.

"The information received to date has not been very reliable," he said.

"The department will need to determine, with a high degree of confidence, that the district has (or will have) the financial wherewithal to repay a loan and whether the repayment would impact the district's ability to borrow in the future (to meet operational needs) or the district's long-term viability," Stanton concluded.

Meanwhile, the school district's acting budget director Paul Bryant, of accounting firm Plante Moran, said the district is holding off as long as it can before asking the Pontiac Board of Education to give its final approval on documents that will start the process for the tax levy -- in hopes the loan will come through.